Wall Street Rises on News of the Obama Economic Team & Citi
Monday, November 24, 2008SUSIE GHARIB: Two big stories today, one big market move. First, Citi is getting more help from the government, in the form of a $20 billion bailout. Second, President-Elect Obama formally announced his economic team. Investors applauded the combination and sent the Dow up another 400 points. Obama's team will include Timothy Geithner as Treasury secretary and Larry Summers as the senior White House economic advisor. Without attaching a dollar figure, Obama also promised a large economic stimulus package saying he doesn't have a minute to waste. Washington bureau chief Darren Gersh has details
DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: The president-elect would not play the numbers game, but it is clear he is thinking about a very large stimulus package for delivery in January.
PRESIDENT-ELECT BARACK OBAMA: We have to make sure that the stimulus is significant enough that it really gives a jolt to the economy, that is it putting people back to work, that it is making investments, that it is restoring some confidence in the business community.
GERSH: Worried that the economy is freezing up, business groups welcomed any hope of a thaw. At the Business Roundtable, John Castellani wants to see the new administration work fast to get consumers spending again.
JOHN CASTELLANI, PRESIDENT, BUSINESS ROUNDTABLE: What we are recommending is find a way to get as much cash in consumers' hands as quickly as possible. When you change the withholding tables that takes time to go through the economy. We've suggested something as radical as a holiday on withholding taxes for both consumers and employers.
GERSH: As expected, the president-elect tapped Tim Geithner to be Treasury secretary. Geithner has been a key player in the Federal Reserve's current financial rescue plans. Larry Summers will be director of the National Economic Council. He's a former Treasury secretary for Bill Clinton. Christina Romer is Obama's pick to head the Council of Economic Advisors. Romer is a scholar of the depression era. This is the team Obama says will sift through ideas to get the economy moving. While business groups praised the caliber of Obama's team, economist Dean Baker worries there are too many familiar faces.
DEAN BAKER, CO-DIRECTOR, CENTER FOR ECONOMIC & POLICY RESEARCH: The problems that we have today, a lot of them originate in policies from the Clinton era, so, in particular the decision to deregulate the financial sector and people like Larry Summers were right in the middle of that.
GERSH: Obama also signaled a new flexibility on the timing of tax hikes on upper income Americans, saying his economic team would advise him whether that should happen next year or in 2010.
OBAMA: It is important if we are going to help pay for some of these expenditures that are absolutely necessary to get our economy back on track, that those who are in a position to pay a little bit more, do so.
GERSH: While he said he still wants to help the auto industry, Obama also argued Congress did the right thing in telling company executives to come up with a workable plan if they want taxpayer money.
OBAMA: I was surprised that they did not have a better thought out proposal when they arrived in Congress.
GERSH: President-Elect Obama warned the economic jolt he has in mind will be costly. We'll hear from him again tomorrow, as he outlines plans to make more room in the budget for some of his spending priorities. Darren Gersh, NIGHTLY BUSINESS REPORT, Washington.
